Industry experts see uncertain future for China EV startups

Analysts see an uncertain future for most China EV startups that exhibited and participated at Shanghai Auto Show. Hundreds of new companies have been formed to make electric vehicles for the China market. However, it is evident at the Shanghai auto show that most of the EV startups will close down after a while.

About 20 EV startups displayed their products at the show but only a few have started production and only Nio, WM Motor and Xpeng Motors have launched their cars commercially. Nio and WM have achieved substantial sales volume. Nio launched its first product, the ES8 electric crossover in showrooms in June. Cumulative deliveries of the ES8 topped 15,000 by the end of March.

WM started shipping its first product, the EX5 electric crossover, to customers in September. The company said it delivered 4,083 EX5s in the first quarter.EV startups like Nanjing-based Byton and Hong Kong-incorporated Hybrid Kinetic exhibited at China auto shows but were absent in Shanghai. According to the successful EV companies, an EV startup must raise more than 15 billion yuan (US$2.2 billion) to launch production, but, most of the new startups haven’t raised a third of that. While more EV startups are likely to start production in 2019, global automakers are also on track to ramp up EV output. 

Volkswagen plans to build nearly 12 million electric vehicles accumulatively by 2028. To achieve the target, the German auto giant is set to produce 600,000 vehicles a year at its EV plants in Shanghai and Foshan next year. If they start to roll out, startups will have to compete with global giants.

If they actually launch EVs and survive the early phase, the startups will have to compete head-to-head with global giants in the domestic EV market.

“Ten years ago, China had more than 100 carmakers, but now only Geely, BYD and Great Wall have gained a foothold,” Freeman Shen, VM’s founder said. “The others were either closed or are half dead.”

He says that most of the EV startups will face similar results with only two or three standing out and the rest closing down.

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